Which legal form is best for your company? We help you find the right legal form.
You should consider the legal requirements before you can start your own business and generate revenue. The first step is to choose the right legal form. This is important because not every legal form is suited to every company. Ultimately, a good choice depends on several criteria such as risk exposure, capital investment and taxation.
There are two basic types of legal form:
There are further subcategories within these two categories. Private companies are subdivided as follows:
The “sole proprietorship” is the cheapest and simplest way of establishing a business. No registration with the commercial register in the canton is necessary for a sole proprietorship with an expected revenue of less than CHF 100’000. We always recommend registration as the advantages clearly outweigh the disadvantages. Additionally, the activity must be reported to and recognised by the cantonal compensation office (Ausgleichskasse) if the status of an independent contractor is desired. Finally, depending on the business model, it is also worthwhile registering for VAT. The greatest disadvantage of the sole proprietorship is that you have unlimited liability for all debts, including with your personal assets.
In a general partnership, two or more natural persons come together to run a business. The general partnership is not a legal entity, but can act under its own name, acquire rights and incur liabilities. All partners of a general partnership have unlimited joint and several liability with their own assets.
When a GmbH is formed, the shareholder managers are personally entered in the commercial register. The initial capital or initial capital contribution for a GmbH is at least CHF 20’000, either in the form of cash or non-cash contributions. Once the share capital has been fully paid up, there is no joint and several liability among the shareholders – only the company’s assets are liable.
One of the advantages of the AG is the high degree of organisational freedom, and it is also very easy to raise external funds. However, at the beginning you need share capital of at least CHF 100’000 (exception: partially paid-up capital/Teilliberierung) and must comply with various requirements under the Swiss Code of Obligations. It is advantageous if the relationship between the shareholders is governed by a shareholders’ agreement, but here, too, Foundera will help structure the perfect solution for you.
Legal entities are obliged to use double-entry bookkeeping. This includes a balance sheet and an income statement, along with the necessary notes and annexes. It is worth bearing in mind that sole proprietorships and general partnerships with annual revenue of more than CHF 500’000 must also prepare a balance sheet and income statement.
There are of course other legal forms besides the examples mentioned, such as cooperatives or associations. Foundera will be happy to help you choose the right legal form in a free initial consultation.
Read here how to form your company with Foundera:
